Accounting Policies of Alembic Pharmaceuticals Ltd. Company

Mar 31, 2015

A) Basis of Preparation of Financial Statements

The Financial Statements of the Company have been prepared and
presented in accordance with the Generally Accepted Accounting
Priciples in India (Indian GAAP) under the Historical Cost Convention
on an accrual basis of accounting. The Company has prepared Financial
Statements to comply in all material respects with the Accounting
Standards specified under Section 133 of the Companies Act 2013 read
with rule 7 of Companies (Accounts) Rules 2014.

The Accounting Policies adopted in the preparation in Financial
Statements are consistent with those of previous year. The Company has
elected to present earning before interest, tax, depreciation and
amortisation (EBITDA) as a separate line item on the face of the
Statement of the Profit and Loss.

b) Use of Estimates and Judgements

In preparation of the Financial Statements, in conformity with Indian
GAAP the management is required to make Judgements, Estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosures of contingent liabilities on the date of the Financial
Statements and the reported amount of revenues and expenses for the
year. All though these estimates are based on the managementÂs best
knowledge of current events and actions, uncertainty of these
assumptions and estimates could result in the outcomes different from
the estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in the current and future periods.

c) Fixed Assets

Certain Fixed Assets have been recorded at a value transferred as per
the Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use. d)
Depreciation / Amortisation Depreciation on Fixed Assets is provided on
Straight Line Basis as per the useful life prescribed in Schedule II of
the Companies Act 2013. Leasehold Land is amortized over the period of
lease.

e) Borrowing Cost

Borrowing Costs directly attributable to the acquisition and
construction of an asset which takes a substantial period of time to
get ready for their intended use are capitalised as part of the cost of
such assets until such time the asset is ready for its intended use.
All other borrowing costs are regonised in the statement of profit and
Loss in the period they are incurred.

f) Investments

Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair value. Long
Term Investments are stated at cost less provision, if any, for decline
other than temporary in their value.

Certain Investment in Subsidiary company are stated at a value
transferred as per the Scheme of Arrangement. The subsequent
investments in the Subsidiary are valued at cost.

g) Inventories

All Inventories are valued at lower of cost and net realisable value.
Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.

Work in process is valued at lower of cost and net realisable value.
Finished Goods are valued at lower of cost including excise payable
thereon and net realisable value.

Traded Goods are valued at lower of Purchase price and net realisable
value.

Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.

Revenue is recognised when the significant risks and rewards of the
ownership of the goods have been passed to the buyer. Sales are
disclosed inclusive of excise duty, but net of sales return, service
tax, value added tax and CST.

Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.

Export benefits available under prevalent schemes are accounted to the
extent considered receivable.

i) R & D Expenses

All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Statement
of Profit & Loss in the year in which it is incurred.

j) Foreign Exchange Transactions

Foreign Currency transactions are initially recorded at the rate of
exchange prevailing on the date of transaction.

Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are converted
at year end exchange rates.

The difference in conversion of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Statement of Profit and Loss.

In respect of forward cover contracts for future probable transactions,
the mark to market loss as at the year end is charged to Statement of
Profit and Loss.

k) Employee benefits

Defined Contribution plan

Contribution to pension fund, Superannuation payable as per
superannuation scheme is provided by payment to superannuation trust
fund, administered by the HDFC Standard Life Insurance Company Ltd. and
ICICI Prudential Life Insurance Company Ltd. and ESIC and labour
welfare fund are recognised as an expense in the statement of profit
and loss. Defined Benefit plan The CompanyÂs contribution to provident
fund, administered through a Company managed trust, is recognised as an
expense in the Statement of Profit and Loss.

The gratuity liability, actuarially valued, is funded through the
scheme administered by the Life Insurance Corporation of India (LIC)
and HDFC Standard Life Insurance and the amounts paid / provided under
the scheme are charged to Statement of Profit and Loss.

Accumulated leave liability (other than sick leave) as at the year end
is provided as per actuarial valuation. Accumulated sick leave is
provided for at actuals in the Statement of Profit and Loss.

l) Taxes on Income

Provision for taxation comprises of Current Tax and Deferred Tax.
Current Tax provision has been made on the basis of reliefs and
deductions available under the Income Tax Act, 1961. Deferred tax
resulting from Âtiming differencesÂ between taxable and accounting
income is accounted in accordance with Accounting Standard 22 (AS-22)
ÂAccounting for taxes on incomeÂ notified under the Companies
(Accounting ) Rules, 2014, using the tax rates and laws that are
enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets can be realised in
future. However, where there is unabsorbed depreciation or carry
forward losses under taxation laws, deferred tax assets are recognized
only if there is virtual certainty of realisation of such assets.
Deferred tax assets are reviewed as at each Balance sheet date to
reassess its realisation. The benefit of credit against the payment
made towards MAT for the earlier years is available in accordance with
the provisions of section 115J (AA) of Income Tax Act 1961 over a
period of subsequent 10 assessment year and it is recognized to the
extent of deferred tax liability in view of the certainity involved of
its realization against reversal of deferred tax liability.

m) Provisions, Contingent Liabilities and Contingent Assets Provisions
are recognised only when there is a present obligation as a result of
past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.

n) Impairment of assets

In accordance with Accounting Standard 28 (AS 28) on ÂImpairment of
AssetsÂ where there is an indication of impairment of the CompanyÂs
assets, the carrying amounts of the CompanyÂs assets are reviewed at
each Balance Sheet date to determine whether there is any impairment.
The recoverable amount of the assets (or where applicable that of the
cash generating unit to which the asset belongs) is estimated at the
higher of its net selling price and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from
the continuing use of the assets and from its disposal at the end of
its useful life. An impairment loss is recognised whenever the
carrying amount of an asset or a cash-generating unit exceeds its
recoverable amount. Impairment loss is recognized in the Statement of
the Profit and Loss. If at the Balance Sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the lower of recoverable amount and the carrying amount that would
have been determined had no impairment loss being recognised.

o) Earning per share

Basic and diluted earnings per share are computed by dividing the net
profit after tax attributable to equity shareholders for the year, with
the weighted average number of equity shares outstanding during the
year.

Mar 31, 2013

A) Basis of Accounting

The Financial Statements are prepared as per historical cost convention
and on accrual basis and are in conformity with mandatory Accounting
Standards and relevant provisions of the Companies Act, 1956.

b) Fixed Assets

Certain Fixed Assets have been recorded at a value transferred as per
the Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use.

Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.

c) Depreciation / Amortisation

Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act, 1956

Leasehold Land is amortised over the period of Lease.

d) Investments

Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair value. Long
Term Investments are stated at cost less provision, if any for decline
other than temporary in their value.

Investment in Subsidiary company are stated at a value transferred as
per the Scheme of Arrangement

e) Inventories

All Inventories are valued at lower of cost and net realisable value.

Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.

Work in process is valued at lower of cost and net realisable value.

Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.

Traded Goods is valued at lower of Purchase price and net realisable
value.

Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales are inclusive of excise duty but net of sales
return, Service Tax & Value Added Tax & CST

Export sales are recognised on the date of bill of lading / Airway
bill.

Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.

g) R & D Expenses

All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Statement
of Profit & Loss in the year in which it is incurred.

h) Foreign Exchange Transactions

Foreign Currency transactions are initially recorded at the rate of
exchange prevailing on the date of transaction Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are converted at year end exchange
rates.

The difference in conversion of monetary assets & liabilities and
realised gains & losses on foreign exchange transaction are recognised
in the Statement of Profit and Loss.

In respect of forward cover contracts for future probable transactions,
the mark to market loss as at the year end is charged to Statement of
Profit and Loss.

i) Employee benefits Defined Contribution plan

Contribution to pension fund, Superannuation payable as per
superannuation scheme is provided by payment to superannuation trust
fund, administered by the HDFC Standard Life Insurance and ICICI
Prudential Life Insurance Co. Ltd., ESIC and labour welfare fund are
recognised as an expense in the statement of profit and loss.

Defined Benefit plan

The Company''s contribution to provident fund, administered through a
Company managed trust, is recognised as an expense in the statement of
profit and loss.

The gratuity liability, actuarially valued, is funded through the
scheme administered by the Life Insurance Corporation of India (LIC)
and HDFC Standard Life Insurance and the amounts paid / provided under
the scheme are charged to statement of profit and loss.

Accumulated leave liability (other than sick leave) as at the year end
is provided as per actuarial valuation. Accumulated sick leave is
provided for at actuals in the statement of profit and loss.

j) Taxes on Income

Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income tax law). Deferred Tax
asset & liabilities are recognised as per Accounting Standard -22 on
accounting forTaxes on Income, issued pursuant to the Companies
(Accounting Standards) Rules 2006 by the Central Government.

k) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.

l) Measurement of EBITDA

The Company has elected to present earning before interest, tax,
depreciation and amortisation ( EBITDA) as a separate line item on the
face of the statement of the profit and loss.

Mar 31, 2012

A) Basis of Accounting

The accounts are prepared as per historical cost convention and on
accrual basis and are in confirmity with mandatory Accounting Standards
and relevant provisions of the Companies Act, 1956.

b) Fixed Assets

Fixed Assets have been recorded at a value transferred as per the
Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use.

Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.

c) Depreciation / Amortisation

Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act,1956

Leasehold Land is amortized over the period of Lease.

d) Investments

Long Term investments are classified as non current and are valued at
cost or net realisable value whichever is lower. Investment in
Subsidiary company are stated at a value transferred as per the Scheme
of Arrangement

e) Inventories

All Inventories are valued at lower of cost and net realisable value.

Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.

Work in process is valued at lower of cost and net realisable value.

Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.

Traded Goods is valued at lower of Purchase price and net realisable
value.

Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
despatch of goods. Sales are inclusive of excise duty, but net of sales
return, Service Tax & Value Added Tax & CST.

Export sales are recognized on the date of bill of lading / Airway
bill.

Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.

g) R & D Expenses

All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Profit &
Loss Account in the year in which it is incurred.

h) Foreign Exchange Transactions

Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are converted
at year end exchange rates.

The difference in conversion of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Profit and Loss Account.

In respect of forward cover contracts for future probable transactions,
the mark to market loss / profit as at the year end is charged to
Profit and Loss Account.

i) Employee benefits

The gratuity liability is funded through the scheme administered by the
Life Insurance Corporation of India (LIC), and the amounts paid /
provided under the scheme are charged to Profit and Loss Account.

Superannuation payable as per Company's scheme is provided by payment
to superannuation trust fund, administered by the ICICI Prudential Life
Insurance Co.Ltd.

Accumulated leave liability as at the year end is provided as per
actuarial valuation.

j) Taxes on Income

Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income tax law).

Deferred Tax asset & liabilities are recognised as per Accounting
Standard -22 on accounting for Taxes on Income, issued pursuant to the
Companies (Accounting Standards) Rules 2006 by the Central Government.

k) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.

l) Measurement of EBITDA

The Company has elected to present earning before interest, tax,
depreciation and amortisation ( EBITDA) as a separate line item on the
face of the statement of the profit and loss.

Mar 31, 2011

A. Basis of Accounting

The accounts are prepared as per historical cost convention and on
accrual basis and are in confirmity with mandatory Accounting Standards
and relevant provisions of the Companies Act, 1956.

b. Fixed Assets

Fixed Assets transferred upon the Scheme of Arrangement have been
recorded at Net Book Value as appearing in the Demerged Company. Fixed
Assets are recorded at cost of acquisition / construction less
accumulated depreciation and impairment losses, if any. Cost comprises
of the purchase price net of Cenvat, Service Tax and Value Added Tax
and any attributable cost of bringing the assets to its working
condition for its intended use.

Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.

c. Depreciation / Amortisation

Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act,1956

Leasehold Land is amortized over the period of Lease. Depreciation on
Research and Development Equipments acquired upto 31.03.2003 @ 100% and
Acquired from 01.04.2003 on Straight Line Method at the rate prescribed
in schedule XIV of the Companies Act, 1956.

d. Investments

Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair market value.
Long Term Investments are stated at cost less provision, if any, for
decline other than temporary in their value.

Investment in Subsidiary company are stated at cost of acquisition / or
as appearing in the Demerged Company.

e. Inventories

All Inventories are valued at lower of cost and net realisable value.

Raw Materials, Stores and Spares & packing material are valued at lower
of cost determined on weighted average basis and net realisable value.

Work in process is valued at lower of cost and net realisable value.

Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.

Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
despatch of goods. Sales are inclusive of excise duty, but net of sales
return, Service Tax & Value Added Tax & CST.

Export sales are recognized on the date of bill of lading / Airway
bill.

Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights. Income from royalty is recognised on an accrual basis in
accordance with the terms of the relevant agreement

g. R & D Expenses

All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Profit &
Loss Account in the year in which it is incurred.

h. Foreign Exchange Transactions

Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year end exchange rates.

The difference in translation of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Profit and Loss Account.

In respect of transactions covered by forward contracts, the difference
between the contract rate and the rate on the date of the transactions
is charged to Profit and Loss Account over the contract period.

i. Employee benefits

The gratuity liability is funded through the scheme administered by the
Life Insurance Corporation of India (LIC), and the amounts paid /
provided under the scheme are charged to Profit and Loss Account. Upon
the Scheme of Arrangement the said LIC Policy and the accumulated funds
therein are in process of being transferred to the Trust created for
the purpose.

Superannuation payable as per superannuation scheme is provided by
payment to superannuation trust fund, administered by the ICICI
Prudential Life Insurance Co.Ltd.

Accumulated leave liability as at the year end is provided as per
actuarial valuation.

j. Taxes on Income

Income tax expense comprises current tax (i.e amount of tax for the
year determined in accordance with the Income tax law).

Deferred Tax asset & liabilities are recognised as per Accounting
Standard -22 on accounting for Taxes on Income, issued by Institute of
Chartered Accountant of India.

k. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.